Recycle and Win a Nobel Prize

Last week, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2017 was awarded to Richard H. Thaler “for his contributions to behavioural economics”. This relatively recent addition to the field of economics takes us into the mind and decision making of consumers. It tests the traditional notion that consumers act rationally when making economic or economically impactful decisions. As a curious observer of consumer behavior, especially relative to clothing recycling, we may be better equipped today to understand the motivations and determinants of our actions in this context.

Looking back into the writings of Richard Thaler, I found a specific blog entry from February, 2012 in which he wrote the following:

Lotteries are just one way to provide positive reinforcement. Their power comes from the fact that the chance of winning the prize is overvalued. Of course you can simply pay people for doing the right thing, but if the payment is small, it could well backfire. …

An alternative to lotteries is a frequent-flyer-type reward program, where the points can be redeemed for something fun. A free goodie can be a better inducement than cash since it offers that rarest of commodities, a guilt-free pleasure. This sort of reward system has been successfully used in England to encourage recycling. In the Royal Borough of Windsor and Maidenhead outside of London, citizens could sign up for a rewards program in which they earned points depending on the weight of the material they recycled. The points were good for discounts at merchants in the area. Recycling increased by 35 percent.

Since this writing, we have witnessed the explosion and pervasiveness of social media, immediate digital gratification and peer reinforcement. These incentives, as an alternative to simple and perhaps ineffectual financial rewards, are definitely worth considering. By encouraging recycling with delight and social reinforcement, we obtain the benefits of sustainability and personal gratification. It is hard to argue with this return on investment.